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HKU - MBA > Managerial Economics > Flashcards

Managerial Economics Flashcards

1
Q

Value added (2 answers) =

A

Buyer benefit - Seller cost

Or

Buyer Surplus + Seller Economic Profit

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2
Q

‘The difference between the buyer’s benefit and their expenditure’ =

A

Buyer surplus

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3
Q

‘The difference between the revenue that the seller receives and the cost of production’ =

A

Economic profit

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4
Q

The two fundamental decisions in business:

A
  1. Participation (‘which’)

2. Extent (‘how much’)

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5
Q

‘The total value of the variable divided by the total quantity of the measure’ =

A

Average value

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6
Q

‘The change in the variable associated with a unit increase in a measure’ =

A

Marginal value

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7
Q

‘A procedure to transform future dollars into an equivalent number of present dollars’ =

A

Discounting

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8
Q

‘The sum of discounted values or inflows and outflows over time’ =

A

Net Present Value

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9
Q

‘The rate of production or delivery of a good or service’ =

A

Scale

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10
Q

‘The range of different items produced or delivered’ =

A

Scope

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11
Q

The ________ boundaries of an organisation delineate activities closer to or further from the end user. By contrast, the ________ boundaries of an organisation are defined by the organisation’s scale and scope.

A
  1. Vertical boundaries

2. Horizontal boundaries

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12
Q

‘A time horizon in which a seller cannot adjust at least one input’ =

A

Short run

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13
Q

‘A time horizon long enough for the seller to adjust all inputs, including possibly entering or exiting the industry’ =

A

Long run

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14
Q

‘The cost of inputs that do not change with the production rate’ =

A

Fixed cost

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15
Q

‘The cost of inputs that do change with the production rate’ =

A

Variable cost

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16
Q

‘The sum of fixed cost and variable cost’ =

A

Total cost

C = F + V

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17
Q

‘The change in total cost due to the production of an additional unit’ =

A

Marginal cost

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18
Q

‘The total cost divided by the production rate’ =

A

Average cost (or unit cost)

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19
Q

‘The increase in output arising from an additional unit of an input’ =

A

Marginal product

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20
Q

‘The change in total revenue arising from selling an additional unit’ =

A

Marginal revenue

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21
Q

‘The scale where marginal revenue equals marginal cost’ =

A

Profit-maximizing scale of production

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22
Q

‘A cost that has been committed and cannot be avoided’ =

A

Sunk cost

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23
Q

‘Total revenue covers variable cost, or price covers average variable cost’ =

A

Short-run break-even

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24
Q

‘A graph showing the quantity that a seller will supply at every possibly price’ =

A

Individual supply curve

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25
Q

‘The ability of a buyer or seller to influence market conditions’ =

A

Market power

26
Q

‘One seller in a market’ =

A

Monopoly

27
Q

‘One buyer in a market’ =

A

Monopsony

28
Q

The 2 ingredients of market power:

A
  1. Barriers to competition

2. Elasticity of demand or supply

29
Q

4 methods of product differentiation:

A
  1. Design
  2. Function
  3. Distribution
  4. Advertising and promotion
30
Q

4 examples of intellectual property:

A
  1. Patent
  2. Copyright
  3. Trademark
  4. Trade secrecy
31
Q

‘…gives the owner an exclusive right to an invention for a specific period of time’ =

A

Patent

32
Q

‘…provides exclusivity over published expressions for a specified period over time’ =

A

Copyright

33
Q

‘…provides exclusivity over words or symbols associated with a good or service’ =

A

Trademark

34
Q

‘…provides exclusivity over information that is not generally known and that provides commercial advantage’ =

A

Trade secrecy

35
Q

‘units sold other than the marginal unit’ =

A

Inframarginal units

36
Q

‘The scale at which the marginal revenue balances the marginal cost’ =

A

Profit-maximizing scale of production

37
Q

‘Total revenue less variable cost’ =

A

Profit contribution

38
Q

‘Price less marginal cost’ =

A

Incremental margin

39
Q

‘The ratio of incremental margin to price’ =

A

Incremental marginal percentage

40
Q

‘the percentage by which the demand will change if the seller’s advertising expenditure rises by 1%, other things equal’ =

A

the advertising elasticity of demand

41
Q

‘Incremental margin percentage multiplied by advertising elasticity of demand’ =

A

Profit-maximizing advertising-sales ratio

42
Q

‘A market with a small number of sellers who behave strategically’ =

A

Oligopoly

43
Q

‘a list of players’ strategies where each player is doing the best she/he can, taking the strategies of other players as given’ =

A

Nash equilibrium

44
Q

‘A market with two sellers who behave strategically’ =

A

Duopoly

45
Q

‘Sellers produce at constant marginal cost with unlimited capacity, and compete on price to sell a homogenous product’ =

A

Bertrand oligopoly

46
Q

‘Sellers compete on price to sell a product differentiated by distance from consumer’ =

A

Hotelling oligopoly

47
Q

‘Demand given the actions of competing sellers’ =

A

Residual demand curve

48
Q

‘A seller’s best action as function of competing sellers’ actions’ =

A

Best response function

49
Q

‘An adjustment by one party leads others to adjust in same direction’ =

A

Strategic complements

50
Q

‘The leader commits to pricing so low that a potential competitor cannot break even’ =

A

Limit pricing

51
Q

‘Sellers compete on production capacity to sell a homogenous product’ =

A

Cournot oligopoly

52
Q

‘An adjustment by one party leads others to adjust in the opposite direction’ =

A

Strategic substitutes

53
Q

‘Both leader and follower sell a homogenous product, and the leader commits to some capacity to grab a larger share’ =

A

Stackelberg oligopoly

54
Q

‘An agreement to restrain competition’ =

A

Cartel

55
Q

‘A strategy that generates worse consequences than some other strategy, in all circumstances’ =

A

Dominated strategy

56
Q

‘A strategy that does not involve randomization’ =

A

Pure strategy

57
Q

‘A strategy where a pure strategy is chosen according to a specified probability’ =

A

Randomized strategy

58
Q

‘A situation where one party can be better off only if another is worse off’ =

A

Zero-sum game

59
Q

‘A situation where one party can be better off without another being worse off’ =

A

Positive-sum game

60
Q

OEM stands for:

A

Original Equipment Manufacturer

61
Q

SKU stands for:

A

Stock-Keeping Unit

HKU - MBA (4 decks)

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